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Argentine crop supplies pick up - as US farmers shut up shop

Argentine growers, amid a record soybean harvest, may be showing signs of stepping up crop sales, after years of hoarding harvests as a hedge against a falling peso, even as their US peers hold-off.

Soren Schroder, the chief executive of ag trading giant Bunge, said that while it is still early in the season to judge Argentine farmers' appetite for selling, for now "we've got active deliveries of soybeans to the ports.

"It's a bumper crop. It's the largest crop we've had," Mr Schroder said, speaking even as the Buenos Aires grains exchange raised by 1.5m tonnes to a record 60m tonnes its forecast for the Argentine soybean harvest, lifting its estimate for the corn harvest by 2m tonnes to 25m tonnes.

The US Department of Agriculture, whose data set global benchmarks, estimates Argentina's soybean harvest at 57.0m tonnes, and corn crop at 24.0m tonnes.

'Running at full speed'

The ready flow of soybeans in Argentina meant that for Bunge "all the crushing plants are running at full speed", and with stronger profitability prospects than a year ago, Mr Schroder told investors.

"Argentina has really taken the stage now of global pricing of soybean meal, and at good margins.

"Whereas last year it was touch and go, Argentina really is an improvement, without a doubt."

The comments come as Argentina is taking an increasing profile on world agricultural markets, given its ongoing and large harvests, at a time when growers have already hoarded significant crop which, being dollar-denominated, acts as a hedge against a falling peso.

The USDA bureau in Buenos Aires estimated last month that, as of the end of March, Argentine growers had some 14.0m tonnes of soybeans in store as of the end of last month, up 25% year on year.

However, it forecast a pick-up in selling, saying that "the stocks bubble will begin to break due to a conflation of factors - currency devaluation pressure, farmer indebtedness, and a surging industry demand".

'Behind in farmer pricing'

By contrast, Bunge underlined the observation of many brokers, and the likes of ethanol group Green Plains, that farmers in many other countries - notably the US - are hoarding crop, in hope of a revival in prices, with Chicago corn futures this week setting six-month lows.

"Marketing patterns suggest that we are tracking about 5% behind in farmer pricing compared to normal," Mr Schroder said.

"Certainly in the US, on-farm storage has expanded at a significant rate over the last years and farmers are increasingly in a position to hold the vast majority of their crop."

And they appear to be employing that extra space to allow them to delay grain sales.

"It is a fact that on-farm storage of crops, corn in particular, is at an all-time record high."

Late-year pick-up

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However, echoing comments from Green Plains earlier in the week, he backed ideas of a pick-up in sales later in the year – assuming the strong harvest which many see as more likely this year, after a strong pick-up in sowings this week.

"Although a lot of storage space has been added in North America over the last several years, you would expect that with another large crop, which we expect, that marketing pattern should return to something more normal in… the last four months of the year," Mr Schroder said.